As I write, in late April of 2009, the citizens of rich capitalist societies are watching their jobs, wealth, and life plans being laid waste by an economic collapse every bit as ferocious as the crisis of the 1930s. Conservative parties and policies that only a short while ago were called midwives to an age of limitless prosperity built on free markets, small governments, and a stoical acceptance of the sufferings of the poor are now objects of popular ridicule and disgust. Employment and incomes are falling at a sickening rate, with the official American unemployment rate rising from 4.8 percent of the labor force in January 2008 to 8.5 percent as of April 2009. Even the most sober economic analysts are suggesting that one in ten American workers may be out of work by year’s end. A housing boom turned bust has destroyed a global financial system once cited as proof that unregulated finance could convert greed into a cornucopia for the masses—if only ham-handed governments kept out of business affairs.
Once-detested liberals were not only granted control of Congress and the White House (as voters cast aside ordinary U.S. Negrophobia) but are trying to reverse the nation’s economic slide by expanding the budget deficit to gargantuan proportions. At the same time, liberal economists and Nobel laureates Paul Krugman and Joseph Stiglitz made no secret of their disdain for the government’s efforts as too small to be effective and too solicitous of an incompetent banking and financial oligarchy. Free market economic thought has buckled under the weight of the market’s wreckage, revealing the remaining proponents of unlimited markets tended by a subservient government to be witless ideologues and charlatans. For the moment, free market zealotry and the cruelty it inspires have been routed by real capitalism. Millions of workers have been left without jobs; many more are employed but frightened, with mortgage payments they cannot meet and without recourse or remedy should they become gravely ill. Baby Boomers on the brink of retirement face the evaporation of their life savings. And a liberal president confronts a scary menu of very risky options.
Does all this mean that the neoliberal program is permanently discredited? No, because neoliberalism or, better, classical liberalism, is a specific cluster of three cardinal values—liberty, equality, and efficiency—which together make up the economic core of a market-based liberal democratic order. These values, shared by classical liberals, egalitarian liberals, and democratic socialists alike, are viewed with an anti-utopian realism by all sectors of the Left, given our understanding of the strengths and weaknesses of the market mechanism. The current crisis, the second collapse of the classical liberal model (after the Great Depression), offers the Left an opportunity to cripple the market Right—so long as leftists do not repeat the mistakes of our forbears during the long...
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